Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context

349. To ask the Minister for Finance in the case of crypto currency holdings, the way in which Revenue determines where the asset is located for taxation purposes; and if he will make a statement on the matter. [55014/25]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context

I thank the Deputy for his question.

I am advised by Revenue that the term crypto currency is not defined within legislation; the characteristics of same are more aligned to those of assets. As with any other activity, the treatment of income or gains received from, or charges made in connection with, activities involving crypto assets will depend on the nature of the activities and the parties involved.

The sale, transfer, or redemption of crypto assets is most likely to be a disposal for CGT purposes unless, based on the facts and circumstances, there is a trade of dealing in crypto assets being carried on.

Where there is a tax event arising on any transaction involving the use of crypto assets, a taxpayer is required to keep proper records of that transaction, similar to other transactions.

Capital Gains Tax

CGT is a tax on gains that arise on the disposal of assets held otherwise than in the course of a trade, including crypto assets. Section 29 of the Taxes Consolidation Act (TCA) 1997 sets out the scope of CGT. An individual who is either resident or ordinarily resident and domiciled in the State is chargeable to CGT on their worldwide gains, regardless of where the asset in question is located or gain arises.

An individual who is resident or ordinarily resident in Ireland, but not domiciled in Ireland, is taxable on a remittance basis. The remittance basis means that an individual is only taxed on foreign income or gains that are brought into (remitted into) Ireland. In line with the principles of full self-assessment, whether or not the assets disposed of are situated outside the State is for the taxpayer to establish, along with evidence of their not being domiciled in the State, in order for the remittance basis to apply.

Further, Revenue guidance provides that the first step in determining whether or not the remittance basis applies to crypto assets is to note that the requirement is that the assets are situated outside the State, and not that they are not situated in Ireland. This distinction is important because, where a crypto asset exists ‘on the cloud’, it will not actually be situated anywhere and therefore, cannot be viewed as ‘situated outside the State’. The location of crypto assets is dependent on the facts and circumstances of each case; where the situs of the crypto asset is in dispute, the onus is on the taxpayer to prove where the gain accrued. Where the location of the crypto asset giving rise to a taxable gain cannot be confirmed by the taxpayer, that gain is chargeable to tax in Ireland based on residency rules.

Corporation Tax

In accordance with section 21 TCA 1997, a company resident in the State is, subject to some exceptions, chargeable to corporation tax on all its profits wherever they arise. The profits and losses of a company entering into transactions involving crypto assets would be reflected in accounts and, where they arise from a trade, will be taxable under normal Corporation Tax rules.

Income Tax

Where an individual is trading in crypto assets, the individual may become a chargeable person for income tax purposes. This places an obligation on the individual to register for Income Tax and file an annual return of income.

The question of whether a trade of dealing in crypto assets is taking place or has taken place depends on several factors and the individual circumstances. Whether an individual is engaged in a financial trade of buying and selling crypto assets will ultimately be a question of fact. A trade in crypto assets would be similar in nature to a trade in shares, securities, or other assets. Where a non-incorporated business makes a trading profit or loss on crypto asset transactions this must be reflected in their accounts and will be taxable in accordance with normal Income Tax rules.

Crypto Asset Reporting Framework

Part 1 of the OECD (2023) International Standard for Automatic Exchange of Information in Tax matters: Crypto Asset Reporting, commonly referred to as CARF and DAC8 update to Directive 2011/16/EU on administrative cooperation in the field of taxation (DAC), will be transposed into Irish legislation by 31 December 2025. Both CARF and DAC8 provide for the reporting of tax information on transactions in Crypto Assets in a standardised manner, with a view to automatically exchanging such information.

The main focus of CARF is to tackle the non or under reporting of income and gains generated from crypto assets by introducing new reporting obligations for Reporting Crypto-Asset Service Providers (RCASP’s) and new exchange of information rules for tax authorities in order to tackle the tax challenges posed by the crypto asset market. The first reporting of data is in respect of the period 1 January 2026 to 31 December 2026 and is required to take place by 31 May 2027. Exchanges with other jurisdictions will take place after this date.